When you hear the term ‘business plan’, do you think of a formal document containing several pages of detailed descriptions of the business process? If so, you’re not alone; this is a widely-accepted perception.
In fact, there is more than one type of business plan. One of these types is known as the lean plan. And its , with beginnings in the Toyota factory. Toyota developed a system called “Plan, Do, Check, Adjust”, or PDCA. This system was one of continuous improvement, where PDCA was applied to each step in the manufacturing process. Each step was planned, executed, the results checked and any necessary adjustments made before starting the plan again.
It wouldn’t be long before the PDCA system was being used to formulate business plans. And it’s no wonder; this system is ideal for streamlining and making the business plan process simpler. Consisting of bullet points for essential tasks and tables and lists, the lean plan is just that; no extras, just specifics about what needs to happen within the business.
Starting a Lean Plan
Beginning a lean plan is most easily done by creating a ‘pitch’. One page long, this pitch will help you to document the necessary parts of your business plan – your tactics, forecasts, milestones and strategy – in simple format. From this point, you can create the rest of your lean plan.
Your tactics and strategy go hand-in-hand. Tactics include those you plan to implement for promotions and pricing, as well as features and product version (if applicable). You can even develop tactics for things like team management and obtaining funds. Your tactics can be listed in point form.
Your forecast section includes all of the financial aspects of your business, including budget, projections for cash flow and your sales forecast.
The milestones section of your lean plan includes any assumptions you have about your business, your business expectations and your responsibilities.
Finally, your strategy can be a few points, reminding you of what you intend to focus on. Here, list your business’s strengths, long-term goals and what makes your business stand out from the rest.
Why Go Lean?
The lean business plan is one that increases the ‘hands-on’ aspect of business planning. Because it is a process of continuous improvement, that means you will need to revisit your lean plan on a regular basis and be constantly fine-tuning aspects of your business to conform to what you’ve outlined in your plan.
The lean plan is long enough to allow you to steer your business in the direction you want it to go, as well as help you to meet the needs of your business. The lean plan will help you achieve the results you want, as well as help you to more efficiently manage your business.
Use the Lean plan to complement a formal business Plan
Although a lean plan is highly effective, it cannot and should not be considered a viable replacement for the longer and more involved formal business plan. The lean plan works very well as an internal document, outlining the things that must be completed by the individuals within. Once information like descriptions and definitions have been added for the benefit of those outside the business – such as investors – this document can be considered to be a more formal plan. You can also make it more formal by adding any market analysis you may have done as well as detailed product descriptions.
The continuity of adjustments in the lean business plan is the job of management, and must be done on a regular basis. The lean plan must be revised and reviewed monthly, with progress being tracked and metrics recorded.